diff --git a/src/components/datepicker/js/datepickerDirective.js b/src/components/datepicker/js/datepickerDirective.js
index cba9caa7af0..050e69771f0 100644
--- a/src/components/datepicker/js/datepickerDirective.js
+++ b/src/components/datepicker/js/datepickerDirective.js
@@ -18,7 +18,7 @@
    * @name mdDatepicker
    * @module material.components.datepicker
    *
-   * @param {Date} ng-model The component's model. Expects a JavaScript Date object.
+   * @param {Date} ng-model The component's model. Expects either a JavaScript Date object or a value that can be parsed into one (e.g. a ISO 8601 string).
    * @param {Object=} ng-model-options Allows tuning of the way in which `ng-model` is being updated. Also allows
    * for a timezone to be specified. <a href="https://docs.angularjs.org/api/ng/directive/ngModelOptions#usage">Read more at the ngModelOptions docs.</a>
    * @param {expression=} ng-change Expression evaluated when the model value changes.
@@ -444,9 +444,18 @@
 
     // Responds to external changes to the model value.
     self.ngModelCtrl.$formatters.push(function(value) {
+      var parsedValue = angular.isDefined(value) ? Date.parse(value) : null;
+
+      // `parsedValue` is the time since epoch if valid or `NaN` if invalid.
+      if (!isNaN(parsedValue) && angular.isNumber(parsedValue)) {
+        value = new Date(parsedValue);
+      }
+
       if (value && !(value instanceof Date)) {
-        throw Error('The ng-model for md-datepicker must be a Date instance. ' +
-            'Currently the model is a: ' + (typeof value));
+        throw Error(
+          'The ng-model for md-datepicker must be a Date instance or a value ' +
+          'that can be parsed into a date. Currently the model is of type: ' + typeof value
+        );
       }
 
       self.onExternalChange(value);
diff --git a/src/components/datepicker/js/datepickerDirective.spec.js b/src/components/datepicker/js/datepickerDirective.spec.js
index 8a591ed1639..38b045b4796 100644
--- a/src/components/datepicker/js/datepickerDirective.spec.js
+++ b/src/components/datepicker/js/datepickerDirective.spec.js
@@ -105,15 +105,20 @@ describe('md-datepicker', function() {
     expect(controller.inputElement.placeholder).toBe('Fancy new placeholder');
   });
 
-  it('should throw an error when the model is not a date', function() {
+  it('should forward the aria-label to the generated input', function() {
+    createDatepickerInstance('<md-datepicker ng-model="myDate" aria-label="Enter a date"></md-datepicker>');
+    expect(controller.ngInputElement.attr('aria-label')).toBe('Enter a date');
+  });
+
+  it('should throw an error when the model cannot be parsed into a date', function() {
     expect(function() {
-      pageScope.myDate = '2015-01-01';
+      pageScope.myDate = 'Frodo Baggins';
       pageScope.$apply();
-    }).toThrowError('The ng-model for md-datepicker must be a Date instance. ' +
-        'Currently the model is a: string');
+    }).toThrowError('The ng-model for md-datepicker must be a Date instance or a value ' +
+          'that can be parsed into a date. Currently the model is of type: string');
   });
 
-  it('should support null and undefined values', function() {
+  it('should support null, undefined and values that can be parsed into a date', function() {
     expect(function() {
       pageScope.myDate = null;
       pageScope.$apply();
@@ -121,6 +126,8 @@ describe('md-datepicker', function() {
       pageScope.myDate = undefined;
       pageScope.$apply();
 
+      pageScope.myDate = '2016-09-08';
+      pageScope.$apply();
     }).not.toThrow();
   });